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CSR IN BUSINESS ENVIROMENT

DR. SHAKUNTALA MISRA NATIONAL

REHABILITATION UNIVERSITY, LUCKNOW


FACULTY OF LAW

PROJECT- ON

“CSR IN BUSINESS ENVIROMENT”

SUBMITTED TO

DR. VIJETA DUA TONDON

ASSISTANT PROFFESOR

FACULTY OF LAW

D.S.M.N.R.U

SUBMITTED BY

PRAWARTIKA SINGH

B.COM.LL.B(HONS)

IX SEMESTER

143070034

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CSR IN BUSINESS ENVIROMENT

TABLE OF CONTENT

INTRODUCTION 03-04

CSR IN BUSINESS ENVIROMENT 07

CSR OF NIKE 07-11

CONCLUSION 12

BIBLIOGRAPHY 13

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CSR IN BUSINESS ENVIROMENT

INTRODUCTION

The forces of Globalization has led to rapid changes in the market place and increased
competition. This force has compelled organizations in India to adopt a fresh perspective. As
Organizations focused on customer, mission and the organization's role, they were forced to
make changes. The paradigm 'Survival of the Fittest' has become the order of the day
resulting in an urgent shift in practices at the enterprise level, that would focus on
Organizational Performance. The current trends have brought a realization among the firms
that in order to compete effectively in a competitive environment; they need clearly defined
business practices with a sound focus on the public interest in the markets (Gray, 2001). The
social context in which business operates at the beginning of the 21st century is highly
uncertain, complex and dynamic. Tensions exist between commercial opportunities on the
one hand and potential social impacts of their exploitation on the other, and sometimes hard
choices have to be made. The activities of legitimate global business create havoc with
climate, environment, biodiversity and the very basis of life on the planet (Collier & Esteban,
2007). The civil society's awareness of the need for corporate social responsibility is also
increasing. There has been a growing interest in Corporate Social Responsibility (CSR)
across a range of disciplines (Hemingway & Maclagan, 2004). Corporate Social
Responsibility is the continuing commitment by business to behave ethically and contribute
to economic development while improving the quality of life of the workforce and their
families as well as of the local community and society at large. 1 This is in contrast with the
Friedmanite assertion that the only responsibility of businesses is to make money. 2 The four
principles of good governance: Accountability, Transparency, Responsibility and Fairness are
related to corporate social responsibility. There are certain issues that have to be addressed by
good corporate governance. These include creating sustainable value and performance,
increasing credibility, increasing stakeholder satisfaction, keeping a balance between
economic and social benefit, keeping the Board independent from management, etc.3

1
Lord Holme and Richard Watts, Making Good Business Sense, The World Business Council for Sustainable
Development publication
2
See Richa Gautam, Integrating CSR into the Corporate Governance Framework: The Current State of Indian
Law and Signposts for the Way Ahead
3
See Güler Aras, David Crowther, Culture and Corporate Governance (2008, Social Responsibility Research
Network, UK)

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CSR IN BUSINESS ENVIROMENT

Correspondingly, there are certain benefits that can be derived from socially responsible
corporate performance. In the long term, a corporate shall achieve an enhanced reputation
with the public and the business community and there will be lesser government regulation
and therefore, time and energy can be saved. It has been shown that there are improvements
in financial performance, increased customer loyalty, boosted productivity and performance
from workmen, etc.

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CSR IN BUSINESS ENVIROMENT

CORPORATE SOCIAL RESPONSIBILITY IN BUSINESS ENVIROMENT-

Corporate Social Responsibility (CSR) in the past decades has intrigued not only the scholars
but the practitioners as well. CSR is one of the most widely researched topics in the extant
research literature, it is still difficult to give a precise and commonly accepted definition. The
term CSR includes environmental, social and human rights-based impacts and initiative of
companies (Ward & Fox, 2002). European Commission in a green paper published in 2001
defines it as 'essentially a concept whereby companies decide voluntarily to contribute to a
better society and a cleaner environment'. 4The concept provides a way for business to
concern itself with social dimensions and pay some attention to its social impacts. Various
definitions of CSR exist. The Strategic Advisory Group on CSR of International Organization
for Standardization (ISO) describes it as ' a balanced approach for organizations to address
economic, social and environmental issues in a way that aims to benefit people, community
and society'(ISO, 2002). According to Peter Drucker (1954) 'the enterprise is organs of our
society and its actions have decisive impact on the social scene. It is thus important for
management to realize that is must consider the impact of every business policy and business
actions upon society. It has to consider whether the action is likely to promote public good, to
advance the basic belief of society, to contribute to its stability, strength and harmony'.
Donaldson and Preston (1995) describe CSR as a source of profits and competitive
advantage, whereas other researchers prescribe the integration of CSR in corporate strategy
as a means to enhance the corporate image and competitiveness (Branco & Rodrigues, 2006;
McWilliams et al., 2006; Porter & Kramer, 2006). According to survey of CSR undertaken
by the Economist (2005), it was suggested that firms need to articulate their social
contributions and to integrate the concept of CSR at the highest level of management decision
making. A majority of companies in the West and the third world have started taking the
concept and practices of CSR seriously (Hopkins, 2003).5As the term “CSR” is used
continually, many complementary and overlapping concepts, such as corporate citizenship,
business ethics, stakeholder management and sustainability, have emerged. These extensive
ranges of synonymously used terms indicate that multiple perspectives and by those in
facilitating roles such as the corporate sector, government agencies, academics and the public
sector.

4
http://www.ey.com
5
http://inflibnet.ac.in

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CSR IN BUSINESS ENVIROMENT

CORPORATE SOCIAL RESPIONSBILITY OF NIKE

INTRODUCTION OF CASE-

Established in 1964 Nike was originally known as Blue Ribbon Sports or BRS. Philip Knight
and Bill Bowerman are the key founders of the company in University of Oregon. The first
operations of the company included the supply chaining of Japanese shoes for Onitsuka
Tiger. Later the owner made the first Nike sports shoes which further earned the fame. With
the passage of time the company expanded its operations with the development of joint
ventures. The formal marketing and advertising were also started through which slogans were
raised for increasing sports activities. Within twenty years the company acquired numerous
apparels and established core business lines. Presently the company is famous for its sports
products and training programs for promoting health awareness among people. It has
sponsored main football teams for gaining the fame. As of 2012 the total revenue generation
was recorded as $25.3 billion with the net income of $2.24 Billion. Currently it has over
45,000 employees globally. The expansion of the company is expected to increase in the
coming period (Nike Inc. Financial Report, 2012).

CORPORATE SOCIAL RESPONSIBILITY

The corporate social responsibility refers to the relationship between global corporations,
government institutions and individuals. However the term majorly emphasize upon the
connection between a corporation and local society. This also includes the association of
stakeholders with the company for its development (Holme, 1999). The self regulation is
highly governed with the business model in which the firms perform. The business monitors
ensure the ethical standards and laws are well observed. CSR can be taken as a process
through which company’s accomplishment persuade to achieve a positive impact through
regulating the environment, employees, stakeholders, communities and consumers.6

6
https://jaroland74.wordpress.com

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CSR IN BUSINESS ENVIROMENT

The social contract includes the application of unselfish and humane behaviour which further
promotes the self interest and self-centeredness. This can put forward some influential ideas
for collaborative control of the company. The focal point for the firms is however to maintain
the social contract among the stakeholders and people of the society. This in return increases
the value of civil society (Leonard, 2003). The key area for CSR is to expand the presence
beyond the present members of the society keeping in mind the future scenario. On the other
hand the actions are highly affected by the external environment in which the company
operates. This environment includes the local societal and wider global environments. There
are numerous factors which influence this environment including the usability of natural
resources within the production cycle, effects of competition among itself and other firms,
fortification of a local community through the development of employment opportunities,
conversion of raw materials, distribution of wealth created contained by the owners of the
organization and climatic change of corporate sector (Portney,, 2005).

Due to the presence of uncertainty in the working environment of companies there are three
basic principles that needs to be followed by the companies including sustainability,
accountability and transparency. These factors include the present steps that are taken and
their affect in the coming future. The proper usability of resources is also included for the
future use and in finite quantity. They emphasize upon proper utilization of resources which
further needs regeneration which can be described through the output models of resource
consumption. It further includes the quantification of the effects of the actions that are taken
and the parties that are involved through the quantification. This in return implies an
exposure to stakeholders for the effects of actions for organizational development (Crowther,
2008).

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CORPORATE SOCIAL RESPONSIBILITY THEORIES FOR NIKE


The Milton Friedman theory for corporate social responsibility depicts that in any business
people are the key players who hold responsibility for maximising the profits. The people
who are employed by the business companies have the accountability towards the business
owners for meeting up ht e desires of the company. Every individual has the perceived
liability in areas away from the business. The main methodology for Nike with respect to the
Friedman’s theory should be to dissemble the mutual representation of businesses into
individual businessmen and to present them as what they really are; hence as a combined
effort of individuals who are paid to work due to the bidding of the owners. For fulfilling
these aspects the management of Nike should be motivated for fulfilling the key roles for
creating a large profit margin instead of evaluating their role in the society.7 Nike is focused
upon providing athletic brand to the customers through innovation and motivation to every
athlete. It has the major focus on observing the major challenges that are present today and
the future. The management of the company stress upon applying core strength to bring about
a systemic change in the products including footwear, apparel and sports equipments
(DeTienne, 2005).

The principles of sustainability are strictly followed as a catalyst for revolutionising the
methodologies of business. The social, environmental and economic challenges are met
through seeking opportunities which can be beneficial for athlete and the environment. This
also improves the creation of a network between the company and customers. Innovative
materials are being used by the company including recycled polyester obtained through
plastic bottles from landfills since four years. Better products are being produced though
transforming markets and perking up the lives of consumers through leveraging sustainability
as the greatest aspect for innovative opportunity (McWilliams, 2006). As sport is the
universal language it helps the societies to encourage joint effort, teamwork, collaboration,
creativity, emotional and physical health and flexibility. It also encourages people to develop
self confidence and is taken as the greatest investment a society can make, hence Nike is
focused upon maintaining the sustainability and accountability factors through an ease of
access to sports for the people (Vogel, 2006). On the contrary Nike has not been the most
successful company to follow the CSR policies. However it managed to rotate its image in
the recent decades as it was characterized as the symbol of abusive labour. As the labour
prices increased in South Asia including Korea and Taiwan the authorities moved its labour

7
https://www.grin

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market to China and Indonesia. It further developed a department whose job was to improve
the efficiency of labourers. However the company faced several insistent criticisms for the
promotion policies of products for which the Fair labor Association was created. This was an
organization of Nike who represented the human rights and ethical code of conduct for all the
employees. It also restricted the minimum working age and labor hours for people. Due to the
introduction of such policies other famous brands also joined the venture of introducing such
laws. Regular audits were formed for solving the problem areas of the company. The
company was the first one to complete the list of factories it agrees with due to the
publication of project reports which reveals the situations and pay the factories
acknowledging the issues (Hess, 2001).

STAKEHOLDERS OF NIKE

Stakeholders include the groups of people who are interested in the business for expanding its
operations (Harrison and Freeman, 1999). The main stakeholders for Nike include
consumers, shareholders, financial agencies, local communities, labourers, governmental
agencies, suppliers and pressure groups. They share common interests for Nike and are
brought on a single policy, for instance including the customer question time, surveys for
staff members and staff forums. However the management of Nike emphasise upon three
major stakeholders including consumers, suppliers and employees. The consumers are asked
for their feedback through which their views are heard and according to which better services
are provided for making the management’s role stronger. The suppliers are also treated well
and due to which Tesco has the best supply chain management and employees who are
encouraged to give their feedback through Viewpoint Staff Survey in which responses to
Staff Questions, Time sessions and staff forums are observed. The stakeholder mapping can
be done as follows (Woods, 2007):

Recognition of relevant groups  analysis of stakeholder’s interests  mapping of


related objectives of stakeholders  ranking of stakeholders

Stakeholder mapping holds vital importance for Nike as the needs of the firm makes the job
for objective meeting easier. The problems prevailing in the business can be determined
which can further help to devise a solution for the management of Nike. However the
mapping procedure requires revising on a regular basis for evaluating that how well the

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meeting with the parties of interest go and the steps to be taken to change the strategic steps
(Walsh, 2008).

The corporate social responsibility refers to the relationship between global corporations,
government institutions and individuals. However the term majorly emphasise upon the
connection between a corporation and local society (Lindgreen, 2010). For Nike this also
includes the association of stakeholders with the company for its development. The self
regulation is highly governed with the business model in which the firms perform. The
business monitors for Nike can ensure the ethical standards and laws are well observed. CSR
can be taken as a process through which Nike’s accomplishments can be persuaded to
achieve a positive impact through regulating the environment, employees, stakeholders,
communities and consumers (Jones et al., 2005). For Nike the social contract includes the
application of unselfish and humane behaviour which further promotes the self interest and
self-centeredness. This can put forward some influential ideas for collaborative control of the
company. The focal point for Nike is however to maintain the social contract among the
stakeholders and people of the society. This in return increases the value of civil society. The
key area for CSR in Nike expands the presence beyond the present members of the society
keeping in mind the future scenario. On the other hand the actions are highly affected by the
external environment in which the company operates. This environment for Tesco includes
the local societal and wider global environments (Andersen, 2009). There are numerous
factors which influence this environment including the usability of natural resources within
the production cycle, effects of competition among itself and other firms, fortification of a
local community through the development of employment opportunities, conversion of raw
materials, distribution of wealth created contained by the owners of Tesco and climatic
change of corporate sector.8

The stakeholders lend a hand in prioritizing key problems and widen the corporate
responsibility policies. Through a great deal from the interactions it was concluded that
productive engagement with stakeholders is most frequent approach that enhance the best
approach to the challenges Nike have in addressing (Doane, 2004).

Nike connects with a wide range of stakeholders on a continuing base together with civil
society, industry, government, consumers and shareholders. Nike performs this
unceremoniously, through set of connections and organizations that it contributes in or is

8
https://www.triplepundit.com

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CSR IN BUSINESS ENVIROMENT

affiliate of and as a prearranged part of its policies on issues and challenges. Nike in addition
accomplishes this through our official enterprise work. Each of Nike’s key enterprise is
presided over by agreements, union and operating principles, encouraging the responsibility
and governance of each partnership.9 Nike have also worked to appreciate how multi-sector
corporation are finest brokers and how to make them accomplish something. Nike considers
that increasing and cleansing skills of paying attention and sense are serious to a company's
success. This has been factual for Nike's record of taking notice to and innovating for athletes
to deliver performance product and the approach of Nike’s corporate responsibility efforts.
Lately Nike has commenced to take appointment with the external world to a new level. Nike
has developed a register of stakeholders for harmonizing the requirement to meet up the
following different criteria: Understanding and aptitude to remark on the company through
previous interactions, aptitude to make available new and different perspectives, proficiency
and standing in corporate responsibility strategy and specific contented areas, Geographic,
gender and subject variety.

9
http://www.fibre2fashion.com

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CONCLUSION
Numerous methods are present for managers of Nike to take decisions. However
corresponding to a method for a problem is one of the expertises. The present day manager
needs to act as a partner, investor, customer and coach to take decisive decisions. For
achieving the upper level of innovation managers need to be completely occupied for making
strategic planning and decisions. However they also need to consider the employee’s way of
thinking. Through balancing the knowledge of science and philosophy, the complexities of
Nike’s CSR management can be resolved in the present competitive market. With the passage
of time the concept and theory of CSR is becoming the top most significant theories among
the management theories. It explains the internal sources with respect to Sustained
Competitive Advantage or SCA. It proposes that if an organisation is aimed at achieving the
state of SCA it must manage the controlling Valuables, Rare, Inimitable and Non-
substitutable resources. It must also have the capabilities to apply the resources which are
obtained through dynamic decision making, competence and Knowledge Based View (KBV).
RBV is famous for its simplicity due to its core message. However it has been criticised for
negative aspects for dynamic market contexts. However following are some outcomes that
CSR strategies can fac

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BIBLIOGRAPHY

WEBSITE REFFRED-

Lord Holme and Richard Watts, Making Good Business Sense, The World
Business Council for Sustainable Development publication
See Richa Gautam, Integrating CSR into the Corporate Governance Framework:
The Current State of Indian Law and Signposts for the Way Ahead
See Güler Aras, David Crowther, Culture and Corporate Governance (2008,
Social Responsibility Research Network, UK)
http://www.ey.com
http://inflibnet.ac.in
https://jaroland74.wordpress.com

https://www.grin

https://www.triplepundit.com

http://www.fibre2fashion.com

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